LONDON: Natural gas prices in Britain dropped on Thursday morning as warmer weather and pending long weekend lowered demand, leaving the system slightly oversupplied.
Gas prices for within day delivery and for Friday were trading at 40 pence per therm at 0830 GMT, down one pence since their last close.
"The recent spell of relatively cold weather is set to end this weekend, pulling down demand, and because this is the August bank holiday weekend, corporate energy demand will be lower as well, so prices came off in response," one gas trader said.
Meteorologists said that average British temperatures are expected to rise from around 12 degrees Celsius on Thursday toward the seasonal norm of 15.5 degrees by the end of the weekend and remain there until at least the first week of September.
Falling demand left Britain's gas system slightly oversupplied.
British gas demand was expected to be 170.2 million cubic metres (mcm), in line with the seasonal norm, and with flows seen at almost 175 mcm, the system was forecast to be 5 mcm long.
The lower demand expected for the coming days also pulled down the wholesale power market, where prices for baseload (24 hours) delivery on Friday were down 0.65 pounds ($1.08) per megawatt-hour (MWh) at 33.75 pounds a MWh.
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